Red Capitalists: Political Connections and Firm Performance in China

Du, Jun; Girma, Sourafel

doi:10.1111/j.1467-6435.2010.00486.x

Cited by 87 publications

(84 citation statements)

References 34 publications

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“…However, the CSR rating effect either inverts or becomes insignificant in relation to QFII investment in state-invested entities. Such results are consistent with QFIIs adopting a political bridge-building hypothesis when investing in state-owned entities (Du and Girma, 2010). The corollary, as supported in table 7a, is that QFIIs are more inclined to support CSRengagement when the rationale for investment is non-political.…”

Section: Principal Findingssupporting

confidence: 87%

“…Findings in relation to our cross-listing dummy (Overseas) question whether the purported 'bonding', governance and disclosure (Coffee, 1999;Stulz, 1999;Oxelheim and Randoy, 2005;Karolyi, 2006 andHope et al, 2013) effects of an offshore listing extend to areas like social-engagement. Our results for Qfiid, which in some regressions show significantly negative CSR rating effects, still accord in some sense with a political bridge-building notion of foreign investment (Du and Girma, 2010;Liu et al, 2014a;Lin et al, 2015;& Jiang and Kim, 2015). In this conception, CSR-engagement is not the top-priority for a QFII investing in a state-or politically-connected entity.…”

Section: Principal Findingssupporting

confidence: 72%

“…The benefits from doing so may be multi-faceted, ranging from licensing and regulatory advantage to improved market access (Du and Girma, 2010). Where such a raison d'etre exists, QFIIs might trade-off the target asset's specific characteristics against wider benefits gleaned from engagement with state-related parties.…”

Section: H3b Foreign Owners' Impact On Csr Ratings Is More Keenly Fementioning

confidence: 99%

“…We examine whether a political-networking motivation underlies foreign investment (Du and Girma, 2010;Liu et al, 2014a;Lin et al, 2015;and Jiang and Kim, 2015). We argue that qualified foreign institutional investors (QFIIs) deploy socialengagement in non-SOEs to build competitive advantage.…”

Section: Introductionmentioning

confidence: 99%

“…This argument resonates with Liu et al (2014a) evidence that QFII funds prefer investment in state-invested entities. Procurement of a "red hat" (Du and Girma, 2010) Foreign parties may play a supplementary role in China's push for cleaner energy. The related FDI literature is instructive.…”

mentioning

confidence: 99%

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The role of board gender and foreign ownership in the CSR performance of Chinese listed firms

McGuinness

Vieito

Wang

2017

Journal of Corporate Finance

693

473

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China's recent promotion of Corporate Social Responsibility (CSR) has coincided with a marked increase in the number of Chinese listed firms attracting female board members and foreign equity investors. Using Rankins' (RKS) ratings over the 2009 to 2013 period, we show that greater gender balance in top-management supports stronger CSR performance. This finding broadens gender-based accounts emphasizing social networks (Westphal and Milton, 2000), Critical Mass Theory (Kramer et al., 2006;Bear et al., 2010;and Soares et al., 2011) and team dynamics (Woolley et al., 2010;and Hoogendoorn et al., 2013). Findings also reveal stronger CSR performance in firms with a female CEO. Female leadership thus appears to be just as important as gender mix in driving CSR change.CSR ratings are also increasing in foreign ownership levels. We examine whether a political-networking motivation underlies foreign investment (Du and Girma, 2010;Liu et al., 2014a;Lin et al., 2015;and Jiang and Kim, 2015). We argue that qualified foreign institutional investors (QFIIs) deploy socialengagement in non-SOEs to build competitive advantage. But in SOEs, where strong political networks already exist, QFIIs have less incentive to boost CSR ratings. However, results indicate little difference in the social ratings of QFII-invested SOEs and non-SOEs.Additionally, we confirm the Barnea and Rubin (2010) contention of an inversion in social ratings at entrenched managerial ownership levels. Non-linear rating effects also emerge in relation to state ownership (Li et al., 2013). Finally, CSR performance exhibits positive (negative) relation with a listed entity's size and age (leverage and lagged return-on-equity) but virtually no connection with independent board representation.

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Section: Principal Findingssupporting

confidence: 87%

Section: Principal Findingssupporting

confidence: 72%

Section: H3b Foreign Owners' Impact On Csr Ratings Is More Keenly Fementioning

confidence: 99%

Section: Introductionmentioning

confidence: 99%

mentioning

confidence: 99%

See 3 more Smart Citations

The role of board gender and foreign ownership in the CSR performance of Chinese listed firms

McGuinness

Vieito

Wang

2017

Journal of Corporate Finance

693

473

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Political ties and firm performance: The effects of proself and prosocial engagement and institutional development

Liu

Yang

Augustine

2018

Global Strategy Journal

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Research Summary: We examine the value of political ties on firm performance in an emerging economy. Using social exchange theory, we posit that political connections propel firms to engage more in proself and prosocial activities, which mediate the relationship between political ties and firm performance. The institutional environment moderates the dual mediations such that as the institutional environment improves, the mediation effect through proself engagement weakens, whereas the mediation effect through prosocial engagement strengthens. We found support for these propositions by analyzing two samples of firms in China: A surveyed sample of 363 small‐ and medium‐sized firms and data from 2,780 publicly listed firms from 1999 to 2014. Our findings shed light on the strategic value of political ties, coinciding with the development of institutional environments. Managerial Summary: Political ties have been considered important for firm survival and performance in emerging economies, as they enable firms to obtain critical information and resources to buffer uncertainty and build up competitive advantages. Our study demonstrates that what truly matters may not be a firm’s political ties themselves but the firm’s strategic engagement in both proself and prosocial activities in order to maintain social exchange with governments. Also, our study reveals that the development of institutional environments alters the business–government exchange and influences a firm’s proself and prosocial engagement differently, making the value of political ties on a firm’s performance difficult to predict.

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The Relation Among Ownership, Environmental, Social, Governance (ESG), and Corporate Social Responsibility (CSR) in China

Zhang¹,

Khayyer

2022

Handbook of Smart Energy Systems

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Red Capitalists: Political Connections and Firm Performance in China

Cited by 87 publications

References 34 publications

The role of board gender and foreign ownership in the CSR performance of Chinese listed firms

The role of board gender and foreign ownership in the CSR performance of Chinese listed firms

Political ties and firm performance: The effects of proself and prosocial engagement and institutional development

The Relation Among Ownership, Environmental, Social, Governance (ESG), and Corporate Social Responsibility (CSR) in China

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